NaturalShrimp has reiterated its desire to uplist to the Nasdaq Stock Exchange via a business combination agreement, less than a month after terminating its merger with special purpose acquisition company (SPAC) Yotta Acquisition Corporation.
The Dallas, Texas, U.S.A.-based recirculating aquaculture system shrimp-farming firm called off its planned merger agreement with Yotta, originally announced in October 2022, on 20 July. In a 25 August shareholder letter, NaturalShrimp CEO Gerald Easterling said it was his company, and not Yotta, that decided to end the merger, and that NaturalShrimp has since demanded make payment of a prearranged USD 3 million (EUR 2.8 million) breakup fee.
“This agreement was intended to result in the company’s ultimate goal of uplisting to Nasdaq. Much time was spent, and work dedicated to this project but ultimately it would not, in the opinion of the board of directors, be as financially beneficial to the company as we were originally promised or would otherwise be in the best interest of our shareholders,” Easterling said. “The continued delays in completing the transaction harmed the company’s ability to keep pace with our planned operational schedule. Much still needs to be done to untangle the relationship between the company and Yotta relating to the termination of the BCA. However, the company is reluctant to provide further detailed information at this time.”
NaturalShrimp’s announcement contradicts information provided in a 10 August U.S. Securities and Exchange Commission filing from Yotta, stating Yotta terminated the merger due to NaturalShrimp’s failure to share the USD 120,000 (EUR 111,000) cost of extending the deadline set by Nasdaq for completing its initial business combination.
“Although the payments were to be shared equally, NaturalShrimp failed to provide its portion despite being notified of its obligation to do so,” Yotta said in the filing. “NaturalShrimp has not responded to the termination letter but previously sent a notification that it was terminating the agreement. The registrant rejected that purported termination as it does not believe NaturalShrimp has a legal basis under the agreement to terminate it. Moreover … NaturalShrimp was not authorized to terminate the agreement when it was in breach of its terms.”
Easterling said NaturalShrimp hoped to announce a merger with a separate Nasdaq-listed shell company within the next 30 days, and has filed paperwork providing for an increase in the company’s authorized shares in order to fund the transaction.
“In order to avoid making a hasty decision by choosing a merger candidate that does not fit with our corporate philosophy, the company will take a measured approach in conducting its due diligence on any potential merger candidate,” he said. “The company intends to sell as few as possible of the newly authorized and registered shares to provide the company with sufficient time, without pressure, to select the appropriate merger partner.”
The additional capital will allow NaturalShrimp to finalize a retrofit of its three 50,000-square-foot production facilities in Webster City, Iowa, allowing for a weekly production of 13,000 pounds of shrimp, which the company estimated would generate USD 6 million (EUR 5.6 million) in annual sales. The company estimated the retrofit will cost USD 2.25 million (EUR 2.1 million).
Access to additional capital via a Nasdaq listing remains a primary goal of the company, according to Easterling.
“[It] will enable the company to establish an institutional investor base not available on the [over-the-counter] market and provide better access to the capital markets as we execute upon our growth strategies,” he said.
Separately, NaturalShrimp has also entered into an agreement with Nagoya, Japan-based Niterra Co. on a six-month trial of the company’s technologies in small land-based shrimp farms in Japan. Easterling said he hoped to expand upon the agreement to form a joint venture with Niterra on more extensive use of its aquatic farming technology in Japan, including its potential use in finfish farming.
“The additional benefit to the company from our new relationship with Niterra will be the joint development of additional enhancements to our technologies in real-world settings and, perhaps, the development of new technologies and processes resulting from the synergies arising out of the joint engineering teams working together,” Easterling said. “The company further anticipates that the contemplated joint venture with Niterra will act as a springboard for additional international joint ventures and further commercialization of our technologies.”
NaturalShrimp recorded nearly USD 500,000 (EUR 463,000) in sales in its most recent fiscal year ending 31 March, 2023, primarily via sales to customers in Texas and the Chicago area. In December 2022, it launched NaturalShrimp Harvest-Select, an e-commerce venture offering mail-order shrimp sales to its shareholders, with eventual plans to expand sales to the general public in Q3 2023.
Easterling reported NaturalShrimp entered into a post-larvae purchase agreement with Homegrown Shrimp USA in March 2023, under which the Indiantown, Florida, U.S.A.-based subsidiary of Bangkok, Thailand-based Charoen Pokphand Foods is providing up to two million postlarvae monthly on a 12-month contract. Long-term, NaturalShrimp plans to build a hatchery in Blairsburg, Iowa, to secure an in-house supply of post-larvae shrimp. It said it has hired a former Homegrown hatchery specialist to design and construct the new hatchery, as well as a hatchery manager to run the facility once it is constructed. NaturalShrimp did not provide a cost estimate for the development.
NaturalShrimp did not provide an update on progress on its planned shrimp farm in Jefferson County, Florida, U.S.A., other than saying the project was still part of the company’s goals. It also said it eventually planned to expand into the Las Vegas and New York markets.
Easterling acknowledged the company had endured significant struggles in recent years, including two fires over the past three years at its La Coste, Texas, U.S.A. facility, but said he remained positive about the firm’s future.
“Despite the challenges we have faced, our vision remains unchanged, and we have made significant progress in enhancing our technologies,” Easterling said. “Our strategic partnerships, ongoing research, and upcoming global projects position us for success and growth in the aquaculture industry. We are committed to delivering on our promise and creating a sustainable future for NaturalShrimp.”
Photo courtesy of NaturalShrimp
